Organizational Structures Overview

Study Notes

Organizes company by specialized tasks/roles (marketing, finance, HR, production)
Each department has a manager responsible for the function
Employees are specialists in their fields, leading to operational efficiency
Advantages:
- Improves performance through focused expertise
- Standardized tasks lead to consistent processes
- Clear communication lines within each department
Disadvantages:
- Departments may become isolated, focus on personal goals
- Cross-departmental collaboration can be challenging
- Decisions require department head approval, slowing response time
Best for small to medium-sized companies or organizations focused on specific tasks or production

Organizes company into semi-autonomous units (divisions) focused on a product line, market, or geographic region
Each division has its own functional departments (marketing, sales, operations)
Divisions are typically led by their own management teams and operate independently of the head office
Advantages:
- Focus on specific business areas, faster response to market needs
- Divisions can be more agile, making decisions relevant to their environment
- Easier to track performance, as divisions are responsible for profitability
Disadvantages:
- May lead to resource duplication across the company (multiple HR or marketing departments)
- Divisions may compete for resources or attention from management
- Higher costs due to running multiple divisions with their own resources
Best for large companies with diverse product lines, markets, or geographical areas requiring dedicated focus.

Organizes employees in a grid-like structure, combining functional departments with product teams
Employees have dual reporting lines, reporting to both a functional manager and a product manager
Designed to leverage the expertise of different areas while fostering cross-functional collaboration
Advantages:
- Enables flexible resource allocation and collaboration between departments
- Facilitates innovation by bringing together diverse skills and perspectives
- Enhanced communication between departments
Disadvantages:
- Can lead to confusion and conflict due to dual reporting lines
- Decision-making can be slower due to the need for coordination between managers
- Higher complexity in managing relationships and responsibilities
Best for companies operating in dynamic and complex environments requiring innovation and adaptability.